Friday, April 19, 2024

Governments work to curb farm trespassing

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By Treena Hein

Growing calls for anti-trespassing laws to protect producers

The Government of Alberta took swift action last year following the invasion of a turkey barn. Premier Jason Kenney showed his support in a press conference hosted at the affected farm.

In December 2019, CTV News reported that 11 animal rights activists had occupied a pig breeding barn in Saint-Hyacinthe, Quebec “demanding full access inside the agri-business operation and a meeting with Quebec Premier Francois Legault to discuss animal rights.” The activists had entered the barn before dawn, and they kept a live video stream going of the entire event on social media.

Earlier last fall, this barn occupation was preceded by an incident near Fort Macleod, Alberta, where 30 activists entered a turkey farm. This spurred quick action by Alberta’s provincial government, which passed the Protecting Law-abiding Property Owners Act and brought it into force in December. Last year, Saskatchewan also strengthened its anti-trespassing legislation, but the changes have yet to come into force.

The Alberta law provides more protection for “law-abiding property owners” from civil liability related to injuries to trespassers where the owner has reasonable grounds to believe the trespasser is committing, or about to commit, a criminal offence. The law also boosts the consequences for trespassers, increasing maximum fines to $10,000 for a first offence and $25,000 for subsequent offences, along with possible prison time of up to six months. It also includes a maximum fine of $200,000 for corporations that help or direct trespassers.

In the view of national animal welfare advocacy group Animal Justice, however, this law “seeks to intimidate people who want to call attention to animal abuse.” Executive Director and lawyer Camille Labchuk added that “Alberta’s ‘ag gag’ law violates the Charter protection for freedom of expression, because it prevents whistleblowers from exposing unethical and illegal acts on farms. It is my view that Alberta’s ag gag law will likely be challenged in court.” She points to a letter signed by more than 40 constitutional and criminal law experts, outlining outlines the reasons why similar legislation in Ontario is unconstitutional.

For his part, Patrice Juneau, Communications Director, Quebec Union of Agricultural Producers (UPA), believes that, “When it comes to breaking and entering on farms, these are no longer demonstrations to raise public awareness. Breaking and entering is a Criminal Code offense. These acts aim to impose an ideology through defamation, propaganda, threat and fear. This type of behavior is strongly condemned by society and must be reprimanded.”

Entering and occupying barns, said Juneau, can cause stress to the animals, creates disease transmission and other biosecurity issues, risks the herd’s health status, harms farm business by hampering market access and can negatively impact farm employees and the targeted farm-owning family. They can even affect the insurability of the farm. Juneau added, “Depending on the damage, the costs can be enormous.”

Ontario’s Bill 156 follows Alberta’s lead

Organizations including Ontario Pork have strongly advocated for better protections for producers.

The rationale for the Ontario government’s proposed legislation, the Security From Trespass and Protecting Food Safety Act, is described by the government in safety terms. In the press release, Ernie Hardeman, Minister, Agriculture, Food and Rural Affairs stated: “We’ve heard from farmers who no longer feel safe in their homes, who have expressed concerns with increasing on-farm trespassing and the safety of their families, employees and livestock.”

The Act proposes a first-time fine of up to $15,000 and $25,000 for subsequent offences. It also prescribes “aggravating factors” that would allow the court to consider increased fines and also allow the court to order restitution for damage in prescribed circumstances, which could include damage to a farmer’s livestock or from theft. It also increases protection for farmers against civil liability from people “who were hurt while trespassing or contravening the Act.”

There is also an added dimension in the bill of prohibiting interference with a livestock transport vehicle such as stopping, hindering or obstructing its movement – and the animals in the vehicle without explicit prior consent.

This aspect of the bill no doubt stems from the now-famous event from four years back when a woman named Anita Krajnc was criminally charged but later acquitted for giving water to pigs on a livestock truck in Burlington, Ontario that was heading to a slaughter plant. Krajnc’s group, Toronto Pig Save, held a protest in December against enacting Bill 156.

However, a spokesperson for Ontario Agriculture, Food and Rural Affairs said the government has received hundreds of letters calling on it to do something about trespassing on farms and obstruction of livestock transport trucks. In addition, more than 130 municipalities have passed or supported calls to strengthen protections for these operations.

In mid-June, Bill 156 was passed with support from Ontario’s majority government. The government will continue to seek input on the legislation, as legal challenges from opponents are likely forthcoming.

Other provinces mulling similar anti-trespassing campaigns

In Quebec, the UPA believes similar farm-specific legislation should be passed.

“In the meantime, in February, the UPA obtained from the Quebec Superior Court a temporary injunction to prevent any further illegal intrusions on farms and is looking to render it permanent,” said Juneau. “But this type of legal proceeding can take a long time.”

As in Quebec, there was a protest on a pig farm near Abbotsford, B.C. last year. The 50 activists present claimed to be there because video footage taken previously at the farm demonstrated abuse of pigs. Charges for break-and-enter and mischief were laid against one of the trespassers.

In a statement responding to situation, B.C. Pork noted that while the video “has been edited and lacks context and understanding, some of the scenes are of concern.” Following the incident, a swine veterinarian was sent to the farm to investigate animal welfare.

Talks in B.C. for farm-specific anti-trespassing laws are proceeding. At least one meeting with the province’s Deputy Minister of Agriculture has been held, and another is planned, said Jack Dewit, Chair, B.C. Pork.

He added that, “We do realize that the animal activists are still quietly working behind the scenes as we focus on other things. We need to be prepared should another farm become the target of another protest, and we need to continue working with the authorities to protect producers.”

In eastern Canada a few months ago, trespassing on farms was addressed by Christian Michaud, President, Agricultural Alliance of New Brunswick in an article published in Atlantic Farm Focus. His organization is looking to engage the provincial government and other stakeholders to develop meaningful mechanisms of deterrence against trespassing on farmland and significant penalties for doing so.

“There is currently no legal recourse in this province, because legislation requires the perpetrator to be caught in the act or with ‘sufficient’ evidence,” stated Michaud. “Enforcement has been very weak, leaving producers with no meaningful legal options for protection. The onus of liability or permission remains in the hands of producers.”

Political support for anti-trespassing on the national level

To address the issue on a country-wide level, John Barlow, Member of Parliament, Foothills (Alberta) & Shadow Minister, Agriculture and Agri-Food Canada, has introduced a private member’s bill to amend the federal Health of Animals Act.

The Act currently features nothing to address the impact of trespassers on animal health. This amendment, says Barlow, will make farm trespassing a more serious crime in order to better protect livestock health, but it will also help protect farmers and their mental health. In creating this bill, Barlow wants to recognize the extreme stress faced by farmers who have had to wake up to intruders in their barns.

He further explains that while the bill, if it becomes law, will see increased penalties for groups and organizations who encourage individuals to threaten the biosecurity of animals and security of workers, it does not in any way limit the individual right to peacefully protest on public property.

“We want to send a strong message that entering farm properties will not be tolerated,” said Barlow. “And we want people to understand the risk in terms of disease transmission.”

The bill has gone through first reading, and Barlow hopes it will be debated this fall.

Undercover employees can deceive producers

Activists are emboldened when strong action against them is not taken. Sympathetic journalists use major platforms to mislead the public and spread falsehoods about producers and their partners.

While these new and proposed laws on the provincial and federal levels may do a lot to deter trespassing on farms, none of the legislation touches on prevalence of “undercover employees” – legal trespassing, if you will, by activists who are hired by farmers and later attempt to expose negative conditions relating to animal care through photographs or videos. In Ontario a few years ago, for example, CTV News reported on undercover video taken at a farm, showing questionable pig handling practices.

In the U.S. over the last few years, several state governments have passed laws which prohibit capturing livestock images without farmer consent. Some of these have been challenged, and in Idaho so far, overturned. But even if illegal, attempts by activists to capture images are likely to continue. So, that leaves prevention – in other words, making sure you do not hire activists.

There are many tips available on the internet, but here are a few of the best: Have each applicant sign a document swearing the application is accurate and beware of applicants with things like high levels of education and no ag experience. Require references and follow through to check them, making sure to contact references through their company offices. Do a thorough social media search as well.

In taking on new hires, state in the employment contract that cell phones must be left in vehicles or lockers. Red flags in new hires include being where they should not be, coming in early or staying late for no reason and other strange behaviour.

With care in hiring, adherence to animal welfare standards and further expansion of anti-trespassing laws, it seems that Canadian farmers are becoming better positioned against the risk of waking up to a barn full of protesters. Time will tell.    

U.S. Pork Cut-outs Continue to Strengthen

Pork Commentary, July 20th, 2020
Jim Long, President-CEO, Genesus Inc.

This past week we saw some improvement once again in pork cut-outs. A week ago, last Friday they were $68.95 while on Friday the pork cut-outs closed $71.19. The increase has been 9¢ lb. over the last two weeks. We firmly believe it has to be strength in the pork cut-outs to push hog prices higher. Cut-outs show demand relative to supply. The psychology of the market is one of huge negativity. It’s almost like there is no light at the end of the tunnel. It’s hard to find much if any positivity. The only solace is it’s so bad it has to get better?

Other Observations

  • U.S. weekly hog marketing’s 2,518,000 up 130,000 from a year ago. Packers are getting hogs killed with Excellent Gross Packer Margin being great stimulus
  • 3 area lean hog price went from 07/08 – 42.72 to 45.36 – 07/16. Right direction but dismal price.
  • We expect breeding herd liquidation is ongoing. Sow slaughter is up, gilt retention is down. It would be the first time in history if liquidation isn’t ongoing in the face of losses of $40 plus per head.
  • Last week in Eastern Corn Belt – 3 packers were actively looking for hogs. Doesn’t appear to be many or any backed up hogs there.

China 

  • China’s hog prices continue to stay at a high level. 36.08 RMB/kg or $2.34 U.S. liveweight a lb.
  • Early wean pigs at 100 RMB per kg.
  • China slaughtered 251.03 million hogs down 50 million from a year ago (20%).
  • Inventory end of June 339.96 million head down 2.2% from a year ago.
  • China sow herd is increasing according to the government statistics up 5.4% at end of June compared to a year ago.

The real fact is the hog price $2.34 U.S. lb. liveweight indicates a real pork shortage and strong demand. Rabobank estimates China Pork output will decline 20% this year to 42.6 million tonnes.

China has imported 2.12 million tonnes of pork January – June. Up 140% from a year ago. There is no doubt China will need massive levels of pork in the coming months. The question who will benefit? 

U.S. Pork Cut outs jump! Aberration?

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Pork Commentary, July 13th, 2020
Jim Long, President-CEO, Genesus Inc.

At the end of last week, U.S. Pork cuts gained about 7¢ lb. or $14.00 plus a carcass (Friday’s close $68.95). Is this an aberration of a sign of some newfound strength in the pork market? Our observation is no one pays more than they have too to get what they want. Maybe we are the boy who sees the manure pile and thinks there is pay inside. One thing for sure this business seems to be one big manure pile for producers.

We believe the hog market, if it gains strength, it will be led by Pork cut-outs. We don’t think it will be lean hog futures. Cut-outs will reflect pork demand and supply.

The market is currently ham struck by the story of a huge number of backed-up hogs. If you were a Pork Buyer would you be aggressively purchasing Pork when all you read is a deluge of Pork is coming? The same buyers can see lean hog futures circling 50¢ lb. Not exactly an indicator that the pork price will explode on you.

Foreign buyers also read our industry news, our global contacts have asked us if we think U.S. packers will be able due to coronavirus to keep operating to supply them import needs.

Three factors – Supply, Futures, and Coronavirus all negatives for hog price appreciation. That’s why the Pork cut-outs price has to lead the way. Only the reality of an appreciating pork price can push back the negatives.

Last week U.S. Packers were aggressive. They handled 2,606,00 up 187,000 from a year ago. We also saw slaughter weights continue to decline. Weights have come down 12 lbs. plus from the May highs. We still can’t rationalize how 3 million-plus pigs are alleged to be backed up across USA but weights continue to drop. We have had hogs four decades, when we backed up hogs, weights went up, not down. Maybe it’s a new paradigm?

In our opinion, the breeding herd continues to decline – the latest week about 68,000. Last year averaged 57,000. We expect every day the number of sows is decreasing.

Last week we asked the Genesus U.S. sales team to name sow herds liquidated or liquidating. Also who they know backed up with hogs. A number of sow herds were named across the Midwest. Few if any backed up hogs in Eastern Corn Belt. In the Western Corn Belt there are some for sure but certainly not all producers. Over the next two weeks watch the hog weights. There at around 280-282 lbs. now. If average weights go into 270’s it tells us the number of hogs net backed up is next to nothing.

If Pork Cut-outs continue to climb it will reflect that buyers have to pay more, not that they want to. With Gross Packer Margins good to excellent, we expect Packers to keep pushing kill numbers. 

The surest cure for low prices is low prices.

Tom Stinson appointed as 
U.S. Director of Sales

We are pleased to announce, Tom Stinson has accepted the role 
as U.S. Director of Sales for Genesus.

Tom has been with Genesus for two years in the role of Cooperate Sales Lead. Tom grew up on a Purebred Yorkshire and Duroc farm.

After attending Kansas State University in Horticulture Science, he was recruited to Murphy Family Farms in N.C.  Tom served in a number of roles including Nevada Missouri Start-Up Production, Construction and Grower Development Lead, then started up the High Plains Operation in Laverne Oklahoma. 

Tom has owned contract nursery farms in Oklahoma as well as other businesses. Tom has a deep understanding of business and production practices.
    
Genesus welcomes Tom in this new role. 

Tom can be contacted via:
tstinson@genesus.com 
+1 913-515-5411

Editorial – Summer 2020

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Message from the editor

The Summer 2020 edition of the Canadian Hog Journal is here!

After a few months that have seemed like an eternity, life is creeping back toward the [new] normal we have been told to expect. With any luck, we will now be better prepared to handle the predicted second wave of COVID-19, if and whenever it comes.

This edition prominently includes an exploration of shared value between producers and packers. It should come as no surprise that this matter is quite controversial and divisive. Many producers I encounter pull no punches when it comes to describing their deep-seated frustrations regarding pricing, and this article is an attempt at reflecting those concerns in a way that can hopefully inspire positive change and a collaborative path forward.

This edition also includes an update on the Spring 2020 coverage of COVID-19’s impacts on the Canadian pork industry. It is a lot to digest, and quite frankly, the news has been happening too fast to cover with an entirely clear picture of the situation. It is a tricky story to tell, and out in the world beyond our industry, our story has, unfortunately, been told badly. This has likely resulted in undue harm to our collective reputation, and we will now have to work even harder to share accurate, balanced news to raise public awareness.

In 2019, several hog and poultry farms in B.C., Alberta, Ontario and Quebec were the victims of animal activist organized crime. It is an indescribable insult to producers’ livelihoods and a black mark on the legal institutions that are supposed to protect farmers but fail miserably. Thankfully, some sympathetic political representatives have been aiming to change the game. This edition looks at what progress has been made.

If you manage to make it all the way through the heavy content, you will enjoy a summer-focussed look at the growth of home cooking, as a result of the COVID-19 pandemic. The story reminds us how, in spite of challenges, we are ready to continue enjoying the brighter side of life to the best of our ability.

Research in this edition covers the potential cost savings of including enrichment for your herd, the intestinal fate of dietary zinc and copper, along with the role of protected acids in sow performance.

I have once again included a “Letters to the editor” section featuring reader feedback. Got something to say about what you see here? Do not hesitate to reach out and let me know. Email andrew.heck@albertapork.com with your thoughts, and they could make it into the next edition!

Letters to the editor

In reply to “Defending the pork value chain during COVID-19” (Spring 2020)

“Marie-Claude Bibeau, Minister, Agriculture and Agri-Food Canada, recently said agriculture needs to ‘make better use of existing [financial] support.’ What support is she referring to? AgriStability, AgriInvest or provincial programs? AgriStability is based on the last five years with the highest and lowest drops, with the remaining three years generating your average. My farm’s average sucks because government refuses to acknowledge what trade wars have done to us. Under AgriInvest, the support is matched up to $15,000. Hell, the carbon tax alone is going to eat that up!” – Maaike Campbell, Arkona, Ontario

In reply to “Defending the pork value chain during COVID-19” (Spring 2020)

“Since COVID started, my family and I have been enjoying lots of Canadian pork. It’s yummy and supports local producers and the economy!” – Karin Melnyk, Red Deer, Alberta

In reply to “Producers should seek better share of export values” (Spring 2020)

“Exports obviously form an important part of the Canadian pork industry, but consumers sometimes forget that there are great local products close to home. I’m proud to serve local food and beverage at my business, The Copper Coil Grill and Still, and I think it’s really important these days especially to support producers.” – Scott Gadsby, Squamish, B.C.

Tracking COVID-19’s continued supply chain impact

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By Andrew Heck

With half a billion active or recovered cases and nearly half a million deaths worldwide, the COVID-19 pandemic has proven to be the most significant public health and economic disaster of the past century.

The pandemic has affected practically everyone around the world in so many ways, including the Canadian pork sector. Since then, much has happened, including the reopening of many previously closed processing facilities, the lifting of restrictions on conducting business, along with other factors that have helped the industry bounce back in some ways, while fundamentally transforming it in others.

Market impacts reverberate across borders

The U.S. Pork Checkoff organization has created an interactive map to show the status of processing facilities. Active plants are indicated in green, partially active plants in yellow and inactive plants in red, as shown in this example from early May.

The impact of COVID-19 on pork markets continues to be observed with a combination of grief and cautious optimism that the Canadian pork value chain will be able to claw its way out of the spring pricing slump. As slaughter capacity returns closer to normal in the U.S., the effect on pricing has been a gradual climb toward the black.

Data from China customs suggests that the country imported more than 400,000 tonnes of pork in April, representing a 170 per cent increase over the previous year. Record-low prices likely encouraged stockpiling, which is no surprise. Meanwhile in Canada, prices for producers plunged to nearly $60 below cost of production during the same period, following initial reports that China would put a stop to pork imports while trying to contain the spread of the virus. This speculation has since proven to be unfounded.

While Chinese domestic pork prices can fluctuate rapidly, they were around three times higher than U.S. pork prices prior to plant shutdowns resulting from COVID-19. The total price gap, for nearly two years, can be attributed largely to the extended African Swine Fever (ASF) hangover that persists to date and continues to silently spread through Asia.

Government support generates mixed response

With hog futures plunging and a great deal of uncertainty around processing capacity, various market factors influenced provincial pork boards and the Canadian Pork Council (CPC) to step up and request support for producers.

In late April, the CPC asked the Government of Canada for an immediate injection of $20 per hog to help producers overcome the projected direct financial losses caused by COVID-19 in 2020. While this ask has not been specifically addressed, producer organizations on the provincial level have been calling on their Premiers and key elected representatives to extend support on a localized level.

Canadian pork margins in late April were well below cost of production.

In early May, the federal government announced an initial agri-food support package that totalled more than $250 million, of which $125 million was earmarked for a producer AgriRecovery program, while $75 million was dedicated to supporting processing, with the $50 million balance going toward a food surplus purchase program.

The government response came as a harsh blow to most commodity sectors, including pork, with many producers stunned by the value of support offered, which was only a fraction of the $2.6 billion requested by the Canadian Federation of Agriculture. Reacting to lacklustre support, the CPC published an open letter to Canadian consumers, calling for their help to vouch for the pork industry.

“Farmers have been telling the government about the need to act for weeks, but it hasn’t been enough to get governments to get meaningful help to the producers that need it today,” wrote Rick Bergmann, Chair, CPC. “That is why farmers need your help. We need you to tell the Prime Minister, ministers, Members of Parliament and senators that now is the time to be serious about protecting our food supply by helping farmers.”

In Quebec, the province’s Union of Agricultural Producers (UPA), Sollio Groupe Coopératif (parent company of Olymel) and other partners issued a combined statement calling on the two levels of government to create a specific assistance program for the agri-food sector to ensure its viability.

“The agri-food sector has managed to maintain a continuous supply throughout the [COVID-19] crisis, but many companies are coming to the end of their resilience,” said Marcel Groleau, President, UPA. “The federal announcement promising $252 million in aid is clearly below the needs formulated by the industry as a whole. In addition, the current programs absolutely do not respond to the exceptional challenges we face.”

The Agriculture Producers Association of Saskatchewan (APAS), likewise, called for further support.

“Any assistance to producers is welcome, but this package is only a small first step in addressing the needs at the farm gate,” explained Todd Lewis, President, APAS. “We need more action from the government to help reduce our risk and secure Canada’s agricultural industry and food supply.”

In mid-March, the Government of Canada announced a $5 billion lending capacity increase to Farm Credit Canada (FCC), in addition to loan deferrals. Since that announcement, more than 4,800 producers and agri-food businesses have used payment deferral options on FCC loans totaling $4 billion and have established credit lines totaling more than $500 million to alleviate short-term cash flow concerns.

To complement that original lending capacity increase, the $100-million federal Agriculture and Food Business Solutions Fund was launched to support a wide range of agri-food businesses, with the goal of returning recipient companies to sound financial footing.

In addition, in late May, eligibility criteria were expanded for the Canada Emergency Business Account (CEBA) to include many owner-operated small businesses, including farms, which were previously unable to access the program. The program is now available to a greater number of sole-proprietor businesses and family-owned corporations that pay employees through dividends rather than payroll.

On the labour front, the government also announced an investment of up to $9.2 million to enhance the Youth Employment and Skills Program (YESP) and fund up to 700 new positions for youth in agriculture. The goal of the additional funding is to help attract Canadian workers aged 15 to 30, to assist with labour shortages brought on by the pandemic. The program will provide employers up to 50 per cent of the cost of hiring a youth worker, up to $14,000.

Many of these initiatives may appear good on paper, and they do much to influence public perception about support for agriculture. Despite that, pork producers have largely failed to benefit from the support, which is geared toward crop and other livestock sectors. The chorus of voices asking for further measures has not been enough to sway Marie-Claude Bibeau, Minister, Agriculture and Agri-Food Canada, who doubled down on her government’s actions.

“We are a government who is proud of taking decisions based on evidence. We’re not taking decisions only based on emotions,” Minister Bibeau said. “Please go and get this money and then it will be much easier for me to identify the gaps and to get the money where it should be going.”

While the federal announcements did little to satisfy most agri-food stakeholders, provincial announcements were welcomed in Alberta, where the government has increased the interim AgriStability payment from 50 to 75 per cent for the hog sector, with a total value of up to $25 million for the sector or up to $20 per pig. It remains to be seen whether producers will be able to benefit from this funding, which does not favour mixed-commodity operations. Timeliness is also key, as the money could arrive too late to make much of a positive difference.

Even if provincial support proves to be helpful in the medium- and long-term for producers, short-term cash flow issues still plague production, which is a message that the industry has carried for some time since well before COVID-19.

Processing capacity changes rapidly

Producers across Canada – like the Pastink family near Taber, Alberta – have taken to social media to offer thanks to essential workers, especially those on the front lines in meat processing facilities, grocery stores, food banks and restaurants.

The pandemic’s threat to staffing and business continuity was felt very strongly by Canada’s meat processors. Given the close-quarters nature of meat cutting, it did not take long for the virus to take hold and spread widely within some plants.

Rather quickly, processors across Canada made commitments to address the safety concerns of workers by providing additional personal protective equipment (PPE) and training, working closely alongside provincial occupational health and safety officials to satisfy requirements. Companies including Olymel and Maple Leaf even offered hourly wage bonuses for workers, recognizing their employees’ important contributions.

Retrofitting measures on the plant floor include taking temperatures of employees, additional cleaning and disinfection, monitoring of hand-washing stations and the requirement for employees to stay home if observable symptoms are present. Physical distancing has been addressed through added space or plexiglass barriers between workers where possible.

Despite these efforts, no amount of cooperation could shield processors from the wrath of certain parties that have been calling for full, immediate, indefinite shutdowns of any plant where even one worker tests positive. These calls for shutdowns have been inspired mostly by two high-profile cases in Alberta beef plants.

With the deeply divided sides – processors and critics – in a political tug-of-war, producers continued to ride the pricing waves, while talk of potential welfare culls generated some backlash online from largely misinformed individuals.

Throughout the pandemic, the Canadian pork industry has been fortunate (if that term can be used) to have experienced only two plant shutdowns affecting domestic slaughter capacity: the Olymel facility at Yamachiche, Quebec, northeast of Montreal, along with the Conestoga facility at Breslau, Ontario, northeast of Kitchener.

The Olymel plant reopened after a two-week hiatus, while Conestoga was able to get up and running after only one week of stalling. The closures caused a backlog of more than 90,000 hogs, many of which were marketed through alternative channels, while others were able to be held in barns for longer periods of time and had their growth deliberately slowed.

In some highly exceptional cases, small numbers of market-ready hogs were euthanized in accordance with the National Farm Animal Care Council’s (NFACC) Code of Practice for the Care and Handling of Pigs, including one publicized example in Prince Edward Island. Reports out of Manitoba suggest that some isolated weaners were also disposed due to backlogs in Minnesota and Iowa, where these animals are typically sold. Despite these off-hand cases, no significant depopulation efforts have taken place in Canada, unlike some locations south of the border.

On the food safety side, processors continue to work with the Canadian Food Inspection Agency (CFIA) and provincial health authorities whenever plant closures are under consideration. Together, these stakeholders determine the length of potential closures and when business operations on-site would be able to resume.

To help create pathways for the secure, continued movement of meat and poultry, in late May, the CFIA established a temporary process to allow inter-provincial trade of goods produced at provincially inspected facilities. The goal is to alleviate any potential food shortages in one jurisdiction if food surplus is found elsewhere.

While political gamesmanship and other influences have received a disproportionate share of attention, processors have been the unfortunate victims of a reputational hit. However, producers and consumers alike should feel confident that Canada’s meat processors are making the necessary efforts to protect our supply chain, even if mainstream media and special interest groups sometimes distort this truth.

Producer organizations forced to adapt practices

Full validations under the Canadian Quality Assurance (CQA) and Canadian Pork Excellence (CPE) programs, which require on-farm visits, were postponed due to COVID-19.

Rather quickly in mid-March, provincial pork producer organizations and other industry partners made decisions to cancel, postpone or adapt upcoming in-person meetings, conferences and other events.

Nearly all pork producer organization staff members temporarily shifted to working from home for more than two months, while waiting on provincial and federal authorities to determine it was safe to return to regular work. For clerical staff, the effect was minimal, but for production and traceability staff, a lack of office access and postponing on-farm visits inevitably caused some interruptions for producers who typically rely on in-person support.

One specific impact was related to completing full validations under the Canadian Quality Assurance (CQA) and Animal Care Assessment (ACA) programs, along with the new Canadian Pork Excellence (CPE) program. These programs represent more than 1,000 producers across the country and all hogs sent to federally inspected processing facilities.

In early June, the Canadian Pork Council (CPC), working through its constituent provincial organizations, resumed full validations under the CQA/ACA and CPE programs, in accordance with provincial public health guidelines – a major relief for those who were coming due to renew certification. Full validations require on-farm visits, which had previously been postponed indefinitely in mid-March.

As the COVID-19 air begins to clear, producer organizations are eager to resume their normal support activities for producers, who are looking for that helping hand more than ever.

Canadian meat industry supports communities

Ontario Pork’s charitable goals this year include raising $100,000 for food banks and also providing boxed lunches for workers in the province’s three federally inspected processing plants.

Support for communities across Canada during COVID-19 has been offered by many Canadian agri-food sectors, including pork.

As food banks across Canada struggle to keep up with rising demand and declining donations, Ontario pork producers met this challenge as an opportunity to get fresh pork to families and individuals in need, through Ontario Pork’s Friends of the Food Bank program and community-based food giving.

The $100,000 fundraising goal includes $36,000 to provide boxed lunches to workers at the province’s three largest processing facilities: Conestoga, Sofina, Domingo’s. The remaining $64,000 will go toward maximizing food bank donations. Ontario Pork will coordinate donations of up to 10,000 lbs. of fresh ground pork per week – or approximately 60,000 servings – based on available funding.

Since late March, Alberta food banks have collected more than $25,000 in donations, and Saskatchewan food banks have collected more than $11,000, specifically thanks to those provinces’ Hutterite colonies. These efforts were spearheaded by a colony near Warner, Alberta, and were recognized in a formal letter from Food Banks Canada.

Processors, like producers, have been stepping up to the plate.

In mid-April, Maple Leaf Foods announced a partnership with Food Banks Canada and Community Food Centres Canada to commit more than $1 million in financial contributions and a further $350,000 in product donations to communities across the country.

HyLife has donated $750,000 to six hospitals, including the Bethesda Regional Health Centre in Steinbach, Manitoba.

In late May, HyLife made a combined $750,000 donation to six hospitals, in recognition for those institutions’ efforts to fight COVID-19. These included four facilities in Manitoba, one in Saskatchewan and one in North Dakota, in locations where HyLife centres much of its production.

Also in late May, Olymel announced that more than 800 employees at three of its Quebec plants had volunteered to work overtime shifts in order to help reduce the backlog of hogs caused by the two-week closure of the Yamachiche plant in April. In addition, for each hog slaughtered on May 30, the company donated $2 to a charitable organization chosen by the employees of each plant, up to a maximum of $5,000.

Altogether, these efforts, untaken during a very difficult time, demonstrate the industry’s ongoing commitment to Canadians – a relationship that is not always fully appreciated. With application details released in mid-June on the Government of Canada’s $50 million food surplus program, it is likely we will see additional charitable efforts, thanks to the new support.

Virus woes decrease but anxiety remains

Hope has been extremely sparse for many over the past few months, but farmers, of anyone, are known to be resilient to a fault. Thankfully, for millions of Canadians and customers around the world, pork producers stand tall with the entire value chain, working together to maintain food security, even while being attacked from so many angles.

COVID-19 will undoubtedly have further consequences for our sector, often unpredictably and unintentionally. In other cases, it is possible that lessons learned will have us emerge stronger and better than ever. Our survival depends on it.

Producer-packer tensions threaten viability

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By Andrew Heck

The Canadian pork industry is only as strong as its least-appreciated asset: producers.

Business continuity is currently under threat due to a host of issues in the industry, and underscoring the struggle is a lopsided relationship between producers and packers, which is further slanted down the value chain at the retail level. Consumers often do not see this, and it remains far too easy for them to ignore that reality when food continues to fill their plates.

Research from the Canadian Centre for Food Integrity (CCFI) shows that the Canadian public trusts farmers, even if many non-farmers are not always up-to-speed with how the agriculture industry operates. As such, producers have earned a significant amount of respect from many people who are simply not aware of the financial dynamics at play. Even among producers, interpreting the dollars-and-cents paper trail can seem like a bit of a shell game.

Addressing long-term viability – specifically independent producer profitability – requires certain challenges to be brought to light for the betterment of all partners. With the decade-low prices seen in September 2018 and similar prices in April 2020, many producers are still stuck in multi-year contracts with packers. As it stands, some producers have been and will continue to make a departure from producing pigs altogether before losing more of their equity.

Coming together for the greater good

In mid-May, the pork producer organizations in B.C., Alberta, Saskatchewan and Manitoba issued a joint invitation to executives from Maple Leaf Foods, Olymel and Donald’s Fine Foods to have an open and frank discussion on the state of the industry, and to work for solutions that generate shared value for producers and processors.

Part of the written invitation reads: “As a result of our flawed value sharing system, pig producers in Canada have needed to rely on the goodwill of the federal and provincial governments and taxpayer dollars to support producers’ very survival.”

It continues, “For too long, the producer and packer have been at odds with each other, and it has created an unmanageable and antagonistic relationship that is weakening the industry and the brand in the global marketplace. This approach must come to an end.”

Shortly after the letter was sent to packers, notice was given to the broader Canadian pork industry and news media. Following the wider distribution, David Duval, Chair, Les Éleveurs de porcs du Québec (Quebec Pork Producers) expressed his support for the initiative:

“This is a very legitimate request that espouses our concerns that we have repeatedly expressed to our partners in Quebec. Sharing the price according to the real value of pork on the markets is a critical issue, both for the sustainability of pork producers and for buyers.”

With the COVID-19 pandemic highlighting some of the stress points in our value chain, producers are eager as ever to work on solutions. With limited options at their avail, many producers are feeling cornered by the lack of incentive to grow their businesses. The resulting stalemate can be considered a huge lost opportunity for everyone.

Processor profits helped by narrow producer margins

Olymel not only exports fresh and frozen pork but also offers a diverse line of products that are enjoyed by Canadians across the country, supported by hard-working local producers, who often receive a fraction of the retail price.

Réjean Nadeau, President & CEO, Olymel, in his company’s most recent annual report, stated: “The Western hog production sector recorded a loss in 2019 almost equal to that of the previous year despite the favourable impact of a weaker Canadian dollar. The loss stemmed primarily from lower livestock prices and higher grain costs.”

While that is no shock to producers, on the meat side, the story was different: “In 2019, the Western fresh pork sector recorded improved results for the fifth successive year despite the suspension of the Red Deer plant’s export licence for China. This solid performance was driven primarily by a higher meat margin stemming from the increase in slaughtering volume and a greater share of value-added products.”

Olymel’s strategic targets, as indicated by the company’s strong push for overseas market development, are largely dependent on a reliable, increasing supply of hogs for its plants. Olymel operates four hog slaughtering facilities in Quebec and one Alberta. Aside from a two-week span in mid-April, during which time one plant was temporarily shuttered after several workers contracted COVID-19, Olymel typically cannot get enough hogs to satisfy existing capacity and new growth.

In Alberta and Saskatchewan, Olymel’s integrated 50,000-sow production accounts for more than 60 per cent of what is shipped to its plant in Red Deer. Factoring in everything else Olymel contracts or buys, the company owns most hogs on-farm in Alberta, effectively controlling the largest proportion of available supply.

The highly skewed nature of producer-to-processor leverage, in favour of processors, places producers in the difficult situation of having only two prominent hog buyers dominating the market. It is a precarious position for those who may feel powerless to break the cycle of disadvantageous contract negotiations.

Further complicating the situation is the difference between production levels and profits in western and eastern Canada, which translates into a disparity between what producers are paid in Alberta and Saskatchewan versus Quebec.

Olymel is a division of La Coop fédérée, now known as Sollio Groupe Coopératif. The cooperative is composed of more than two dozen localized traditional agriculture networks in Quebec, to which thousands of hog producers belong. In 2019, Sollio distributed $17.6 million in patronage refunds to cooperatives and paid a $2.4 million dividend to the Cooperative Pork Chain.

In addition, for those who raise hogs in Quebec, the provincial Farm Income Stabilization Insurance (ASRA) program provides an added competitive advantage by acting as a form of collective insurance to protect against market and production cost fluctuations. Complementary to the federal AgriStability and AgriInvest programs, ASRA pays compensation when the average selling price is lower than the stabilized income. The stabilized income is based on the production cost of specialized farm businesses.

In western Canada, there is one saving grace for producers who sell to Olymel: a transport proximity bonus, introduced in mid-2019, that helps off-set the cost of shipping to Red Deer. Additionally, the company has recently widened its grids to accept larger hogs, introduced incentives for group sow housing and provided new futures-based forward-contracting options. While these perks have helped sweeten the pot for some, many producers are still seeking options for mutual prosperity.

Olymel asks to revert Quebec pricing decision

Quebec’s recently established pricing formula has proven to be an equitable, stable model based on a price control mechanism, quality assurance premiums and cut-out values.

Among the potential solutions that could help producers across Canada is a pricing structure that takes into consideration cut-out values, such as the model in Quebec.

Despite having established a new pricing model for that province less than two years ago, Olymel appealed to the Régie des marchés agricoles et alimentaires du Québec (the province’s commodity marketing council) in early Marchto suspend the use of the existing price formula for a four-month period, on account of the COVID-19 pandemic, citing short-term processor losses.

Olymel’s request was for a return to a combined formula taking 75 per cent of the previous structure while maintaining 25 per cent of the current structure outlined in the province’s 2019 to 2022 Marketing Agreement. Les éleveurs de porcs du Québec (Quebec Pork Producers) quickly opposed the decision, which would have slanted the tables back to less equitable pre-2019 times.

Quebec Pork’s opposition was based on Olymel’s lack of a comprehensive proposal that would help reduce surplus pigs – a key issue at the time of the request. In the interest of fair risk sharing, Quebec Pork offered a temporary fallback proposal, which involved a 50 per cent calculation combining the two pricing formulas.

The rationale for the temporary decision was largely based on Olymel’s arguments: destabilization due to COVID-19, including the Yamachiche plant’s two-week shutdown and consequent retrofitting measures required for workers, caused harm to Olymel’s slaughter margins and would have further affected meat-cutting. While such measures equally impact those who raise pigs, the suggestion of a combined formula disappointed producers.

In early June, following a series of hearings, the Régie overturned the temporary 50-50 split, favouring a reversion to the pre-COVID structure. The decision, however, adds a condition that prevents the hog slaughter price from falling below 65 per cent of the cut-out price. In May, the price disparity resulted in record-high payouts to producers. Further hearings to review the decision are scheduled for July, August and September.

Going green while producers are in the red

Maple Leaf Foods’ green initiatives have been turning heads around the world, but are producers being noticed?

Sustainability in the pork sector can mean different things to different people. For consumers, the word often conjures up impressions of eco-friendliness. But for producers, business continuity is the primary focus when margins are tight.

In November 2019, Maple Leaf Foods made the announcement that its organization had become the first major food company anywhere in the world to achieve carbon neutrality through the purchase of carbon offsets in addition to processing plant upgrades. As a result, in December 2019, Maple Leaf received a $2 billion loan from BMO as a sustainability incentive. This type of “green lending” is gaining traction in Canada as motivation for companies to lower their carbon footprint.

In January 2020, Rory McAlpine, Senior Vice President, Government and Industry Relations, Maple Leaf Foods, suggested during the Canadian Agricultural Economics Society policy summit in Ottawa that competitiveness is an issue for processors. Environmental regulations, carbon pricing and other factors have hindered growth compared to Canadian processors’ American counterparts. While the argument may hold water in a direct comparison, Maple Leaf’s $600-million chicken processing facility under construction in London, Ontario, announced in November 2018 – which is receiving more than $50 million in combined funding from the governments of Ontario and Canada – may also suggest a discrepancy in that line of reasoning.

With the release of Maple Leaf’s latest annual report, Michael McCain, CEO, stated: “At Maple Leaf Foods, we have embraced the principle of shared value and are on a purposeful journey to become the most sustainable protein company on earth… We believe our company’s financial health and competitiveness are intertwined with the health of local, national and global communities.”

He added, “For the year, our meat protein segment delivered 10.4 per cent adjusted EBITDA margins, up 50 basis points over the prior year, while absorbing the impact of difficult and unnaturally volatile market conditions which produced headwinds of 110 basis points. This speaks to the underlying strength of the business.”

Maple Leaf’s pursuit of shared value, while noble, may appear to conflict with its ambitious growth strategy. And while growth is no sin in the business world, the consequence may be that producers are no longer able to compete.

Contracts demystified using new tools

Alberta Pork has worked with the CPC to develop a pricing calculator (under development) that lays bare contract options, to give producers a decision-making advantage.

For the average producer, making heads or tails out of contract specifics can be a nightmare. For those signing the contract without a full disclosure of straightforward information, what appears to be a win-win deal can end up hurting producers by locking up their hogs at an unfavourable price. Market volatility is the name of the free market capitalism game, but not every party is necessarily equipped to fight fairly.

In early May, Alberta Pork published on its website a new Economics section designed to support producer success by providing the tools for effective contract decision-making. The section includes pork market and hog supply reports, information on cost of production and the latest economic research, in addition to pricing formula breakdowns for western Canada’s federally inspected processors.

“COVID-19 has changed our world, and it is now time to fix the main issue that hampers the Canadian pork industry,” said Darcy Fitzgerald, Executive Director, Alberta Pork. “Producers are simply asking for a system that gives them a financial reason to produce pigs. The catalyst for change is transparency, and it starts by placing as many cards on the table as possible. With the problem fully laid out in the open, it becomes more difficult to avoid solutions that are beneficial to both parties.”

Following on that work, Alberta Pork teamed up with the Canadian Pork Council (CPC) in June to develop a pricing calculator to allow producers to use their own numbers for evaluating various contract options.

“The calculator will provide an important opportunity for producers to consider adjusting their businesses, according to any marketing options they might have in the future,” said Phyllis MacCallum, Sector Analyst, CPC. “With the help of this new tool, we hope to strengthen producer leverage and encourage further work toward a fairer, more accurate pricing structure for all Canadian pork producers.”

The calculator will use pricing formula data compiled in-house by Alberta Pork, based on U.S. Department of Agriculture (USDA) mandatory reporting, which is also the basis for Canadian prices. Producers can enter their own information, which then creates a hypothetical comparison between contracts for most western Canadian packers and Quebec. The goal is to eventually include options for additional packers, including those in Ontario.

Donald’s pursues unique opportunities

B.C.-based Donald’s Fine Foods sources most of its hogs from Alberta. The company also operates Thunder Creek Pork in Saskatchewan.

It can be challenging to serve niche markets, with an Asian focus, while having to rely on a largely out-of-province source of hogs, but Donald’s Fine Foods has risen to the occasion for more than two decades.

Starting in the late-1990s, Donald’s made significant investments to grow Britco Pork – an acquisition that helped transform the company from a humble Lower Mainland meat cutter into an up-and-coming heavy hitter in western Canadian pork processing.

In 2005, Donald’s meat-cutting facility in Richmond, B.C. was commissioned, followed by the purchase of Thunder Creek Pork in Moose Jaw, Saskatchewan in 2010, along with the launch of the Sakura Farms brand in 2012 and the purchase of Five Corners Meat Co. in 2017.

The province of B.C. is home to only a handful of commercial producers, making hog supply a challenge for a company looking to maintain – let alone expand – its operations. As such, Donald’s today relies extensively on Alberta producers who ship to its slaughter plant in Langley.

It can be a perilous trip across the Rocky Mountains, no less than 1,000 kilometres for the closest producers in Alberta, and while new transport regulations have been a learning curve, Donald’s maintains its commitment to producers by fully covering transport costs and pricing pigs to match the Maple Leaf Signature 4 formula.

In late May, Donald’s undertook an eight-week study to determine the viability of converting a former beef plant in Moose Jaw into a sow processing facility, to complement its operations at the nearby Thunder Creek plant. The study is considering the financial feasibility of such a conversion, in addition to overall support from producers, the public and government.

“[This] announcement is the first step toward a strategic investment to meet the demand for domestic sow processing,” says Allan Leung, CEO, Donald’s Fine Foods. “We want to create more opportunities for pork producers and support the forecasted need for domestic sow processing capacity.”

Thunder Creek will continue to operate independently, and the jobs created from the sow processing facility would be entirely new. The new plant is anticipated to employ approximately 100 people, with the capacity to process most cull sows in western Canada. Currently, producers export over 80 per cent of their cull sows to the U.S.

HyLife steps up to the plate

Along with paying producers a premium for CPE, HyLife is growing business in a responsible way, including the acquisition of new assets in Manitoba and Minnesota.

As producer organizations continue to lean on packers for support, one stands out in terms of its progressive efforts to strengthen relationships: HyLife. In April, the company introduced new premiums to reward producers, including a bonus for hogs validated under the Canadian Pork Excellence (CPE) program, in addition to weight- and ration-based incentives.

Like other counterparts in Canadian pork processing, HyLife is undertaking ambitious steps to grow business. In early May, the company announced the acquisition of more than 37,000 sows and 250 employees after purchasing ProVista’s hog operations.

“We have a long working relationship with ProVista and look forward to building on all the hard work that they have done,” said Grant Lazaruk, President & CEO, HyLife. “This acquisition enables HyLife to expand our production team and secure hog supply to facilitate future growth.”

In late May, HyLife further grew its capacity and employee base by purchasing a 75 per cent equity interest in Prime Pork, a recently renovated facility that produces, processes and sells pork products out of Windom, Minnesota, southwest of Minneapolis. Prime Pork raises 300,000 feeder hogs to market weight annually and sources the remainder from third-party suppliers. The newly acquired plant currently processes one million hogs annually, on a single shift. The company’s main processing facility is in Neepawa, Manitoba, northeast of Brandon, where they process 3.2 million pigs annually.

While HyLife shares its competitors’ growth desires, the company appears to be taking calculated, considerate steps toward expansion with independent producers’ interests in mind, helping to augment the company’s integrated operations – a refreshing situation for everyone.

All parties must cooperate to move forward

As the 2020 calendar year stumbles along in often unpredictable ways, flaws in the Canadian pork supply chain’s shared value approach are being made more apparent than ever.

The COVID-19 pandemic did not cause the issues inherent to the pork sector when it comes to pricing and capacity. However, the pandemic has highlighted in a very powerful, public way the vulnerabilities that exist within our system.

In terms of ensuring the viability of that system in the future, it will need to adapt. In terms of cultivating a positive reputation for our sector, all parties will need to cooperate and present a united front to retailers and consumers. Transparency is key.

Producers and the industry cannot wait any longer for change. The ball is now in the packers’ court. Who will accept the challenge, and who will dismiss it? At this point, it is not a matter of discovery and understanding, but action.

“There are no problems, there is just a lot of little problems.” -Henry Ford-

Pork Commentary, July 6th, 2020
Jim Long, President-CEO, Genesus Inc.

Henry Ford was a man who went bankrupt more than once. It didn’t dissuade him, he kept going and in time built a business empire and became a legend in America/World business.

Henry Ford comes to mind as seven years ago this July 4th weekend, my family went to Detroit and toured the Henry Ford Museum, Greenfield Village, and the Rouge River Ford Assembly Plant, all legacies of his foresight. Of note, Henry Ford evolved the modern Car Assembly line after visiting a Hog Packing Plant in Cincinnati, Ohio where he saw hogs being carried by a moving line to stationary workers.

The U.S. hog industry is in a dark time. Prices and the losses associated with that are huge. Some estimates put potential annual U.S. producer losses at $5 billion total. Henry Ford statement “There are no big problems, there is just little problems.”

What are the little problems (little might be subjective) in the hog industry?

Lean Hog Price

Lean Hog Prices are in the mid 40’s.

Losses per head are $40-60 for many producers.

Coronavirus

Coronavirus tore up the Packing Plants. Now they appear to be back to near normal production. Can they keep going? Gross Packer Margins are excellent working as huge incentive to kill hogs.

Hogs backed up.

Certainly, the plant closures and slowdowns backed up Hogs. Our sense, most of Eastern Corn Belt is not backed up, Canada is not backed up, Eastern Iowa is okay. The dilemma is the 4-state corner of Iowa–Minnesota–South Dakota–Nebraska. There it’s a real issue.

Lean Hog Futures

Lean Hog Futures seem to us, an indicator of speculation more than the reality of the pork industry supply-demand too many times.

Observation – almost all if not all world hog markets are higher priced then the U.S. None of the other markets have a lean hog future market.

Spain which has the third-largest hog production in the world has a unique way to set their national hog price. Every Thursday 1:00 pm representatives from the Producers, Packers, Processors and Retailers meet to set the price of market hogs for the week. We have attended the meeting in the past. Seems to us these negotiations have led to a continual balancing of each segment of the industry’s interests where each sector’s margins are respected. It takes away one sector losing $40-60 per head which another is making $60.

Pork Export 

Exports have held it. Appears U.S. to China exports were record high in May. With China hog prices above $2.00 U.S. a lb. they should buy lots more. The little problem is the U.S.–China political relationship. Ag products seem to get targeted in trade wars.

China has agreed to a Phase 1 deal to purchase U.S. ag products including Pork. It’s to the U.S. pork industries interest this is honored.

Mexico, the U.S. largest pork importer by volume, in May saw its hog price collapse. Since then it has recovered. This will lead to a recovery of U.S. pork exports to Mexico that had declined substantially.

U.S. Legislation

This past week U.S. Senators: Inhofe (Oklahoma), Burr (North Carolina), Tillis (North Carolina), Ernst (Iowa) and Grassley (Iowa) introduced new legislation.

The bill would: 

  1. Compensate hog producers who are forced to euthanize or donate animals that can’t be processed into the food supply due to Covid-19 related packing plant capacity reductions;
  2. Increase funding for animal health surveillance and laboratories, which have been tapped to perform Covid-19 testing during this human health emergency.
  3. Revise the Commodity Credit Corp. charter so a pandemic driven natural emergency qualifies for funding.

All these points are a reflection of the current swine industry situation.

June 1 U.S. Hogs and Pigs Report Glass Half Empty and/or Glass Half Full

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Pork Commentary, June 29th, 2020
Jim Long, President-CEO, Genesus Inc.

The June 1 USDA Hogs and Pigs Report had what in our opinion some interesting numbers.

June 1 Pigs Inventory (1,000 head)
 201920202020 as percent of 2019
Kept/breeding 6,4106,32699
Market69,31673,308106
Market Hogs and Pigs by weight group 
Under 50 pounds 22,21022,160100
50-119 pounds19,69320,370103
120-179 pounds14,39616,090112
180 pounds and over13,01714,687113
 201920202020 as percent of 2019
Sows Farrowing (1,000 head)
March 1 to May3,1333,172101
June 1 to Aug *3,2753,12395
Sept 1 to Nov *3,2653,09095
*intentions   
Pig Crop (1,000 head)
March 1 to May34,45434.933101
Pigs per Litter
March 1 to May1111.01100

Some Observations

The breeding herd is shown being down 1% but farrowing intentions are down 5%. The two numbers don’t align. Being optimistic we will go with the 5% lower farrowing. If that is the case and assuming no litter size increase like in the last quarter, drop last year’s Pig Crop June–Nov by 5% that’s 72,575,000 x 5% = 3,628,750 fewer pigs or 140,000 less a week. A significant decrease.

We have a hard time figuring the 50,000 sow herd drop in the last quarter. Sow slaughter was 90,000 more in the quarter than the same year before. We know of many farms that liquidated. We know gilt sales decreased. No doubt gilt retention decreased. Sow mortality was not abated. The 1% drop in sow inventory doesn’t jibe with 5% less farrowing intentions.

The quarter before Dec 1-Feb sow herd decreased 96,000, but only 50,000 this last quarter with all hell breaking loose in the last ninety days? Hard to comprehend. We expect the sow herd is declining each and every day.

The USDA Report indicates over 1.6 million more hogs than a year ago over 180 pounds. Certainly feasible but certainly isn’t the 7 million some were speaking of.

The number we can’t figure is the 1.6 million (+12%) head more this year than last in the 120-179 pound range. Where did these come from? Who has been slowing up these pigs? These pigs would’ve been in the March Report under 50-pound range and that was a plus 4%. Can’t figure this one.

Other Observations

Pigs under 50 pounds in June 1 report are the same as last year.

Packers are out offering new contracts. We haven’t seen that for a while. Indicates to us they want to lock up hogs in a supply program at prices more to their advantage versus when hog supply gets tighter.

What we don’t understand is if hogs are backed up why are Packers calling producers to get hogs? Not everywhere but in some places. The old adage “who’s calling who” comes to mind. Producers recently weren’t calling but begging to get hogs in.

Some people have said recent sow slaughter has been inflated by large market hogs. Last year sows averaged 304 lbs. carcass weight. This year April – 305 lbs., May – 303 lbs. You would expect a big number of large market hogs in sow slaughter would pull down average sow weights. 

All barns aren’t full. We know of a large site of almost 20,000 spaces that was empty. On Friday were told if we wanted some empty barns we could get. Biggest question, who has the capital and courage to own the pigs.

Last Thursday the avg weight on the National Daily Carcass Report was 210.95 lbs., down 2 lbs. from the week before. We continue to have a hard time understanding how the average weight of hogs continue to drop if hogs are backed up. The weight has dropped 10 lbs. since May. The weights are also lower than the same time a year ago by 1-2 lbs. 

Packers continue to ramp up production. Last week getting to 472,000 head on Friday and 2,641,000 for the week. Weekly slaughter was significantly higher than a year ago with 250,000 more hogs. The first time year over year any significance for several weeks. This might explain the weights declining fast but then again if hogs backed up, what gives?

Lean Hog Futures – the trades had a good pounding down hogs on Friday. They focused on the backed-up numbers and minimal decrease in the breeding herd.

Summary 

June Hogs and Pigs Report did next to nothing to support the market. It will continue to be a tough slog until market numbers come down. We expect continued liquidation.

The Path to Genetically Healthier Pigs

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by: Chad Bierman, Ph.D., Geneticist, Genesus Inc

Pathogens are a global threat to the swine industry. They arise from bacterial, viral, fungal, and parasitic sources. Numerous and often prone to mutation, with a tendency to become immune to treatment efforts over time.

Production flows within the North American swine industry routinely face challenges from multiple pathogens, and a resultant annual cost to the North American swine industry estimated in the billion-dollar range; with PRRS estimated at $664 million alone (AASV 2011 Position Statement on PRRS elimination). This suggests the swine industry would benefit from animals that have a higher capacity to survive health challenges.

An animal’s ability to withstand a disease challenge can be defined in many ways. Resistance, Resilience, Tolerance, and Robustness are all relevant descriptors. Genetic selection for each concept is uniquely defined, distinctively implemented, and depending on the circumstances, it can be beneficial under differing situations. Genetic selection for disease resistance seems optimal, as an animal resistant to a disease would appear to have an advantage over an animal that is not able to control a disease challenge; however, targeting a specific pathogen requires a considerable amount of upfront investment. Adding to that, the earlier-mentioned fact that there are numerous pathogens presents a real challenge to become resistant to them all. Viruses also tend to mutate, which can lead to low-rewarding efforts should the targeted pathogen suddenly transform and become re-infective to the population.

Selection for disease tolerance instead of resistance recognizes that an animal can still perform under the burden of varying disease levels. However, selection for disease tolerance requires simultaneous measurements on both performance and the levels of infection. Another downside to genetic selection for resistance or tolerance is the challenge of acquiring continuous records of the pathogen burden. The burden levels will likely vary over time, yet are required for genetic selection in both instances (Doeschl-Wilson et al., 2012).  

A final hurdle is that pathogen burdens do not exist within high-health nucleus herd environments that the pork industry demands. Therefore, an alternative approach is warranted.  

The concept of disease resilience offers the aforementioned alternative. It is a combination of resistance and tolerance and is defined as the ability of an animal to maintain performance across environments when exposed to pathogen challenges (Albers et al., 1987). Disease resilience is unique in that selection in favor of does not require specific knowledge of any certain pathogen or level of challenge. The resilience phenotype can, therefore, be considered robust across stressors, both health-related and non-health-related, and more practical for selection on the population’s future fitness when considering there will be new pathogens that arise for which we are currently unaware.  

Selection for disease resilience targets those genes that allow an animal to have a tolerating consequence, or quicker recovery in their performance when challenged (Figure 1). Instead of targeted gene discovery for a single pathogen, the selection is placed on a multigenic scale within the genome, using quantitative and molecular tools inside our genetic toolkit. The Genesus answer to healthier pigs lies within genetic selection for disease resilience phenotypes.  

Genesus has been involved in funding disease research for over 10 years. Several useful tools have been discovered from genome-wide association analyses and incorporated into the Genesus toolkit.

  • We have uncovered genomic regions that we place under selection to improve resilience to Porcine Reproductive and Respiratory Syndrome Virus (PRRSV).  
  • We are monitoring genomic regions found to affect susceptibility to Porcine Circovirus Associated Disease (PCVAD).  
  • Genesus is staying abreast of outside research and benefiting from our relationships within academia to improve our population’s resilience to E.Coli challenges.  

Furthermore, disease resilience traits have more recently been identified, which will aid in filling the previously empty, phenotype void. These phenotypes are necessary for selection purposes, and Genesus is now able to key in on those specific attributes to identify more disease resilient animals.  

The trek is not finished, however.  Active research continues, and more tools continue to unfold for use in genetic selection for improved health.  Diseases are becoming more numerous and geographically spread. For this reason, selection for disease resilience must continue to be a key component inside the genetic selection programs of swine.

Genesus continues its involvement in disease research and is working to actively combine genomics and disease resilience phenotypes in the selection for higher-health animals. In the forthcoming months, we will share more of the breakthrough discoveries from our involvement in major research projects involving Genome Canada, Genome Alberta, PigGen Canada, USDA National Institute of Food and Agriculture (NIFA) and the Alberta Meat and Livestock Agency. Through Genesus and these funding agencies, collaboration with projects and researchers at several major Universities around the world (e.g. University of Alberta, University of Saskatchewan, University of Guelph, Iowa State University, Kansas State University and University of Edinburgh) has transpired over the past decade.  

We look forward to sharing in more detail what implementation has occurred inside of Genesus from our collaboration with researchers at these organizations, and our involvement in utilizing these resources.  

Source: 

Albers, G. A. A., G. D. Gray, L. R. Piper, J. S. F. Barker, L. F. Lejambre, and I. A. Barger. 1987. The genetics of resistance and resilience to Haemonchus contortus infection in young Merino sheep. Int. J. Parasitol. 17:1355–1363.

Doeschl-Wilson, A. B., B. Villanueva, and I. Kyriazakis. 2012. The first step towards genetic selection for host tolerance to infectious pathogens: Obtaining the tolerance phenotype through group estimates.  Front. Genet. 3:265.

Hog Market Continues to Suffer

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Pork Commentary, June 22nd, 2020
Jim Long, President-CEO, Genesus Inc.

Last week the U.S. hog market harvest reached 2,587,000, about 130,000 more than a week ago and a year ago. Packers are obviously getting more hogs killed as they navigate coronavirus issues including having enough employees at work. Packers have great motivation as the DTN Gross Packer Margins calculation is $53 per head, a year ago it was around $20 per head. We expect U.S. Packers to continue to ramp up production, motivated by excellent gross packer margins.

U.S. hog market weights continue to decline. The first four days last week had everyday weights about 1.5 lbs. lower than the same day the week before. Weights last week on the National Base were also over 1 lb. lighter than a year ago.

Some claim 4-7 million hogs backed up due to plant closings and shutdowns but we have a hard time, right or wrong, getting to that number with weights having dropped 10 lbs. liveweight since the first part of May. Also, we hear from the field a number of our Genetic customers are not backed up. Many are selling ahead in case of plant closures. The last week we heard of plants in the Eastern Corn Belt calling looking for hogs. The customers we do have backed up are in the Quad state corner of Nebraska-South Dakota-Minnesota-Iowa. There it is real. The multi-plant closures in that area have caused real problems. 

We also know there has been ongoing euthanization of market hogs and smaller pigs. How many is anyone’s guess but it has and is happening. 

Usually, this time of year is near maximum finishing capacity as all pigs to be harvested from now to January are in inventory. Question if the market thinks there 4-7 million hogs backed up what will market do if inventory is less than this? Should there not be upside? If you’re a pork buyer whether domestic or foreign, you all have the same news. All these hogs backed up, why would you want to be an aggressive pork buyer when this expected supply is coming? Bottom line we don’t believe 4-7 million hogs backed up. June 1 U.S. Hogs and Pigs Report will tell us the story. 

Sow Harvest continues to be aggressive the latest weekly was 69,000+, last year’s average 57,500. It appears to us last quarters sow harvest was about 100,000 more than the same quarter a year ago. We also believe many poor skinny sows of little value (Hello world’s largest genetic company) that would normally go to slaughter are now being put down and not in sow slaughter count.

We expect  U.S. breeding herd is down at least 150,000 in the quarter and would not be surprised if it’s down 200,000 or more. Whatever the number, the U.S. production capacity continues to contract.

SummaryThe June 1st Hogs and Pigs Report, in our opinion, has the makings to be a major market mover to the positive. For us producers let’s hope so.